US venture capital spending droops

US venture capital fell again last quarter, quashing hopes that the two-year slump may be over.

Total venture investments in the US fell to $6.2bn for the first quarter of 2002, 24 per cent down from the previous quarter, according to the PricewaterhouseCoopers/Venture Economics/National Venture Capital Association MoneyTree Survey.

The venture capital business has been in decline since mid-2000, when the dot-com bubble burst two years ago, but last quarter the figure rose slightly, from $7bn to £7.1bn, fuelling hopes that the decline was over.

The number of separate deals recorded in the survey also fell last quarter, at 787 compared to 994 for Q4 2001.

However, the latest figure is still higher than any quarterly figure recorded before 1999 - so by pre-boom standards, the venture capital business is still in good shape.

The industry has not entirely abandoned start-ups, which accounted for 19 per cent of dollars invested and 26 per cent of deals struck. Both figures were slightly up from the previous quarter's figures of 16 per cent and 23 per cent, respectively.

Tracy Lefteroff, global managing partner of the venture capital practice of PricewaterhouseCoopers, said in a statement: "A sustained recovery is unlikely until technology spending by corporations increases and liquidity options improve."